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A number of former Delphi Corp. executives are in line to be sued by the SEC for securities fraud related to accounting problems at the company, according to a Detroit News story (here). Once the largest auto supplier after its spin-off from General Motors in 1999, Delphi filed for bankruptcy in October 2005, and its accounting for various transactions have been the subject of civil and criminal investigations for over two years. The investigation focused on round-trip transactions that inflated Delphi's income and the booking of loans from suppliers as "rebates" that allowed them to be recognized as income. In addition, a $300 million payment to its former parent was accounted for differently by each company, which resulted in GM being dragged into the investigation. Among those identified as likely to be sued include Delphi's former v-p of treasury, the former director of financial accounting and reporting, and the former chief accounting officer. At this point it is unclear whether Alan Dawes, the former chief financial officer terminated in 2005, will be sued by the SEC. An ongoing grand jury investigation may result in charges against one or more of the Delphi executives, and the SEC may be waiting to sue Dawes and others until the criminal investigation is complete to avoid any problems with discovery. No word either whether the Commission is preparing a case against GM. Because Delphi is still in bankruptcy and will emerge as a significantly different company, the SEC may forgo filing charges against it. (ph)

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» Ex-Delphi Execs Face SEC Claims from Securities
The Securities and Exchange Commision has approved the filing of civil fraud claims against the former chairman and chief executive of Delphi Corp and against its former chief financial officer for accounting improprieties. The commission voted to appr... [Read More]